UK - Volatile equity markets will encourage trustees to diversify their portfolio and branch out into alternative asset classes, speakers at The Pension Show told delegates.
The Pension Show is an event organised by MSM International, the publishers of IPN.
World Gold Council head of institutional investment Robert Weinberg – speaking at the investment seminar – said that alternative investments had become a “hot topic” with portfolios based on only traditional assets most likely to fail against benchmarks.
And Weinberg told trustees it was now time to consider gold which boasts liquidity as one of its major selling points. He told delegates: “Portfolios that contain gold are usually more robust than those that do not.”
Deutsche Asset Management director Adam Sorab praised the returns that hedge funds offer pensions funds. He said: “Hedge funds are excellent diversification tools with strong returns. Compared to UK equities they outperform. On average a hedge fund gives 15-16% returns consistently.”
Baring Houston & Saunders director of research and forecasting, Ian Whittock, discussed how property investment was a useful class for enhancing yields in pension portfolios.
He said: “Property is the best performing asset class even though we are at the end of the property cycle. It offers high yields, especially as there isn’t much yield around at the moment.”
Whittock said that the average rate of return on property over the next three years was estimated to be over 9% per annum.
Corporate bonds are an asset that “need to be fished for carefully”, according to Prudential M&G’s Pam Burgess, but over time “they should make up default risk”.
And AIM Money Management managing director Marc Doman said that cash offered safety, stability and diversification, particularly at times of market instability.
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